BA-CA Purchasing Managers’ Index in June: After a good Q2, orders from abroad decline for first time
- Despite the slowdown, Q2 more dynamic than feared in April
- Fewer orders from abroad for the first time in 24 months
- Further deceleration to be expected in the second half of the year
After rising slightly in May, the Purchasing Managers’ Index of Bank Austria Creditanstalt (BA-CA) fell again in June from 54.1 to 53.5. “Austria’s industry remains on course for growth, but the pace is declining further,” said Marianne Kager, Chief Economist at BA-CA, summarising the result of the latest Purchasing Managers’ Index.
The main trigger for the downturn is new orders from abroad. “For the first time in two years, industry in Austria has reported a decline in export orders,” commented Stefan Bruckbauer from BA-CA. The index dropped below 50 to 49.4. Although incoming orders continued to rise overall as a result of domestic orders, the pace has significantly slowed. This is reflected in the lower index value, which dipped from 51.8 to 51.5.
In June, however, the slowdown in incoming orders had not yet affected growth in output and in fact production was somewhat higher than in May. The corresponding index edged up slightly from 53.4 to 53.6. Nevertheless, this value is significantly down on the average for 2006 of 58.3.
“Austria’s industrial economy was again relatively robust in the second quarter, and although the growth rate flattened, the trend was not as pronounced as still feared in the spring,” explained Kager.
The employment rate moved in line with the development of output and although the corresponding indicator dropped again from 54.1 to 53.6, it is still considerably over 50.
The sharp upswing in purchase prices continued and with an increase in June from 62.0 to 62.2, the indicator remains high. Sale prices reported by the industrial companies surveyed confirmed the picture of good but slowing economic growth. The sale price index dropped from 53.4 to 53.0, its lowest value since March last year. As a result of declining demand, industrial companies again did not restock their inventories of input materials as much as in recent months. This indicator fell to just over 50 at 50.3.
For the second half of 2007, the economists at BA-CA anticipate a further downturn in the industry growth. “Declining orders from abroad and only a slight rise in orders indicate a slowdown in the economy in the second half of the year, but not a slump,” said Bruckbauer. As a result of the good first half, 2007 as a whole should be a very good year for Austrian industry.
N.B.PMI figures above the 50.0 mark indicate growth on the previous month, readings below the 50.0 mark indicate a decline. The greater the divergence from 50.0, the greater the growth or contraction tendencies. This report contains the original data from the monthly survey among purchasing managers of industrial companies in Austria. The survey is sponsored by Bank Austria Creditanstalt and has been carried out by NTC Research under the patronage of ÖPWZ since October 1998.
Enquiries: Bank Austria Creditanstalt Economics and Market Analysis
Stefan Bruckbauer, Tel. +43 (0)5 05 05 ext. 41951